5 ways brokers can rapidly digitise and innovate
Almost since the beginning of Nivo, we’ve been proud to support lending brokers with their digital innovation agendas. This year has clearly made digital innovation a must, no longer a nice to have for all brokers across all sectors.
We thought it would be good to share the top 5 things we’ve learned from working with brokers on how to rapidly digitise and innovate effectively:
- Buy don’t build
Being a broker is challenging, often in very competitive markets. Building technology is also very hard, very expensive and carries a lot of risk it is impossible to foresee. Being both a broker and a technology company is therefore very, very difficult!
Assuming technology differentiation isn’t the core part of your business strategy, “buy” has to be the approach. Never before have so many options been available. We are all fortunate to live in the UK with one of the world’s best funded FinTech sectors. £billions have flooded in to develop solutions for almost every conceivable need for any financial institution. By sourcing SaaS solutions you can be operational in hours, have a proven high quality solution and pay a fraction of the cost as R&D is effectively shared across all of the FinTech’s clients.
- Make quick decisions
Making decisions costs time, and time costs money. In the old days when technology was a huge investment with massive risk (i.e. when it had to be built) investing in decision making processes was crucial. The incredible flexibility, selection and cost effectiveness of SaaS creates another opportunity. You will make much higher quality and efficient decisions by making more, quick decisions on the technologies you want to try.
Of course, when making these quick decisions, not every technology will work out. Let’s be honest, even when making long, expensive decisions on technology there are plenty of disaster stories we’ve all heard about. What the speed and low cost of procurement of SaaS technology now means though, is that the risk of any technology decision is much lower. Those brokers we have seen have the most successful technology programmes are not afraid to try new things quickly, adopt those that work, and lose those that don’t. This leads to much better end technology solutions, because it eliminates so many assumptions from the decision making process. You are making decisions on real operational learning rather than through different people debating different theories.
- Prioritise security
Whilst SaaS FinTech has opened up incredible opportunities for brokers, there is one area where no financial institution can be complacent. Security. There are already huge security issues with common practice across brokers through the use of unsecured channels like email, paper and post. Over many decades though, at least the risk of these channels have had a chance to be properly understood. Any new SaaS solution potentially creates a new attack vector for your brokerage, and this won’t have been tested by decades of use.
The good news is that many SaaS solutions built specifically for financial services will seek to increase security controls as the market rightly demands this. Be sure to validate this though, particularly when looking at SaaS solutions not specifically for financial services. Even when making quick technology decisions, a security incident can obviously be catastrophic for any business, particularly a lending brokerage.
- Invest in operational change
Whilst the capital needs for technology investment have plummeted with SaaS, one part of most technology projects hasn’t. Operational change is still crucial to the success of any project impacting a broker’s team. The importance of this is often overlooked. As a decision-maker focussed on change and improvement, you may well find yourself at odds with the rest of your brokerage on the need to digitise and change. It is easy for people to convince themselves that customers love the way things are done and they should always be that way.
When introducing any technology impacting staff therefore, be sure to commit the time and effort into operational change. No change will be successful without this. It is often good to include the people who will be using new technologies as early as possible in the process. This way they will feel ownership for the decision. Focus not just on reaching agreement on the solution, but also the benefits that could be possible. Once the technology is implemented, take the time to walk through processes and provide clarity through training and communications on how existing processes need to change. Once operational, continue to discuss the change regularly. Determine objectively (ideally through pre-determined measures) whether the change is having the desired impact. Seek to identify operational changes that can improve and optimise the impact of the technology.
- Prioritise customer experience and integrate iteratively
When thinking about technology change, it is easy for people to immediately think about integrations. Rekeying effort between any two systems is boring, time consuming work. Any member of staff will be grateful for any technology change that removes a rekey activity (and frustrated by any that introduces one). This clear staff demand often leads brokers to put disproportionate emphasis on removing rekeying when considering their digital plans.
In reality, the chances are that rekeying is far from the biggest resource drain in any brokerage. We have never come across a market where the dominant brokers had attained that position through the integrated nature of their back office. There are likely non-technical changes that would have a far greater impact on operational efficiency if that is where a brokerage is struggling to compete.
Instead, where we have seen dominance and rapid growth in broker markets, is where brokers have focussed on their digital customer experience. Customer advocacy brings in new and repeat business. When it comes to digitisation, many customers expect it, and the more convenient, quick and clear technology is for them, the more they love it.
We would therefore always recommend focussing on the customer experience first when digitising. Determine what your customers want and get as close as possible to that. As long as you select modern SaaS technology solutions, integration will always be an option afterwards. Whilst integrating different applications is a technical job that will require some degree of ‘build’, the standards of modern SaaS solutions make it many times more easy to integrate than in the past.
The great thing about approaching digitisation this way around, is that when it does come to integrating, the amount of effort any rekey is taking is easy to measure. The benefits of the integration are therefore very clear, and the change so small it is likely to be quite easy to provide an accurate cost estimate for it. This means you can iteratively pursue an integration agenda quite rapidly, prioritising the work to remove each rekey based on those integrations that offer the best return on investment.